SEN. HILLARY CLINTON, D-N.Y.: If anybody tells you there is no vast right-wing conspiracy, tell them that New Hampshire has proven it in court. We have the facts, and we're going to make that a crime.

(END VIDEO CLIP)

HANNITY: Well, New York's junior senator is also making waves today with the claim that the mugging of 101-year-old should be blamed on the Bush administration's cuts for community policing programs. Joining us now, former adviser to Vice President Cheney, Mary Matalin is with us.

HANNITY: A lot of it does, but, you know, it's fascinating to me. No one can deny her husband is a masterful politician. He's smooth. Whatever those gifts are, you know, everyone tells you that has met him, you're the only person that exists when you meet him. She's shrill. She's angry. She's reactive to Barack Obama. She can't seem to get her footing. Why not?

MATALIN: Well, she's not him, but that's cool, OK? I'm not James. You're not your wife. She has considerable political skills of her own, and they are mighty, believe me. Conservatives should not underestimate them.

What was odd about this burst was, it's not politically smart. If we know something or anything about this political environment, it's that people want —they don't want that sort of political diatribe anymore, and they want to look forward. They want to turn the page. They want something fresh.

Her political liability right now is not that her skills are comparative to her husband's necessarily, but that she's not fresh. She's not the fresh thing. She's not the new thing. So by bringing up these old, ancient and the negative kind of politics that people eschew in this environment, it's not smart politics. I don't understand it.

HANNITY: You know something, Mary? We're now at the stage where, you know, not only is Bush wrong on everything, he's responsible for anything that goes wrong. You know, Hillary's statement is quoted in the Daily News today, you know, basically blaming Bush for cuts to community policing programs leading, you know, to this incident.

You look at, for example, in the Clinton years, when he first comes into office, he, along with Janet Reno, they fired 93 U.S. attorneys. In the case of the investigation into Arkansas and the Whitewater deal, they fire the Little Rock U.S. attorney. They replaced that U.S. attorney with a former law student of Mr. Clinton's. And, yet, they're trying to make hay on everything.

Is this part of a strategy, keep the Republicans off balance, on defense, create an impression of impropriety at all times? Is this part of the 2008 strategy?

MATALIN: Well, of course it is. And it's not a secret. It's not part of the vast left-wing conspiracy, which is far more tangible than anything she thinks is happening on the right, or they do. It's an announced strategy. They've said it forever. They said it in the election. They pronounced when they came into office, that they weren't going to govern, they were going to investigate, and they were going to bash Bush. And if he could prove to them he could walk on water, they'd say, "Well, you can't swim," as the old political adage goes.

It's not effective, though, and particularly discordant was this exploiting of this poor woman who was mugged because, a, there's — the data is completely contradictory of what she said. Crime is down; spending on it is up. But people don't connect that kind of horrific crime with politics. That is personal responsibility.

HANNITY: All right, let me ask you, this, because we're now — I think we're at the point on the Democratic side — and I look at that tape, I get angry every time I see it — on the Democratic side, we literally have a situation where Hillary Clinton may lose to Barack Obama.

Now, you're on the Republican side. Who do you think is emerging as the leader? Fred Thompson is threatening or saying he may get in the race. You know, who do you like?

MATALIN: I continue to think it's a volatile field and...

HANNITY: But who do you like? And are you concerned about their position on social issues, which keeps coming up?

MATALIN: You know what, I'm like Kellyanne Fitzpatrick, the best pollster in the business. I'm not for who; I'm for a what. And I think most conservatives are for, what is the best defense of contemporary conservatism? How do we apply bedrock conservative principles to 21st- century problems?

And each of these candidates have assets. You know, I'm a conservative. I'm not a Republican. I'm conservative first. We've talked about this.

ALAN COLMES, CO-HOST: I was hoping you'd be more like James tonight. Is that a possibility?

MATALIN: What, shave my head, Alan? How are you?

(LAUGHTER)

COLMES: This is how you talk about your loving husband, I can't believe it.

MATALIN: I love him, but I don't think he's going to win as easily as he thinks. That's the other Democratic problem here. They think...

(CROSSTALK)

COLMES: I don't how you two — anyway, look, let me ask you this. Look...

MATALIN: How do you do your marriage, Alan?

COLMES: I'm doing OK. Thank you...

HANNITY: Touche.

COLMES: Thank you for asking. Neither of us have shaved heads. Now, listen, let me ask you about this.

This Daily News article, I saw nothing in there that blamed Bush. What I read was that Hillary Clinton said she can imagine how the mugging of a 100-year-old woman makes every older person make everybody feel, and she said we have to get back to making crime reduction a number-one objective.

Help me understand where the president was blamed here, because I didn't see that.

MATALIN: Because obviously implicit in that is that it's not been a key objective of this administration, and it has been, and there has been increased funding, and, indeed, the data shows that crime has gone down consistently over the five or six years...

(CROSSTALK)

COLMES: She never said anything to the contrary. She said, "Let's help make crime reduction a number-one objective." And you're taking — they're so sensitive in the Bush administration that somehow it's perceived that that's a slight against Bush, when you she says let's make crime reduction...

MATALIN: We're sensitive? Any time — Alan, don't talk about sensitivity to me. Any time any Republican asks any Democrat to explain what their strategy for winning the war in Iraq is, they say we're challenging their patriotism.

COLMES: You are.

MATALIN: There's not — there's sensitivity — that is completely...

COLMES: When you have Dick Cheney, your former boss, compare Nancy Pelosi and what she wants to do on Iraq to an Al Qaeda strategy, I think that's outrageous to talk that way about fellow Americans.

MATALIN: You can read. It's available for you to read, for anybody to read, everything that Usama bin Laden has said about what the Al Qaeda strategy, the extremist strategy is for winning against the Western powers, and it is exactly what they are suggesting, Nancy Pelosi is suggesting we do. It's get out of the region, get out of Iraq, get out of region...

(CROSSTALK)

COLMES: With benchmarks that the president himself came up with. But to liken Democrats — I keep hearing us liberals being accused of being mean-spirited in the comments we make. When you have the vice president of the United States twice in the last two weeks refer to Democrats having an Al Qaeda strategy, that's an incredible insult to most of the country that does not agree with this administration's war policy.

MATALIN: Well, I think you're sensitive because there is no Democratic — there is no liberal victory plan. There is no liberal — there is no Democratic war for the global war against these extremists.

COLMES: No one defined victory on your side, either. No one's told us what it is. There's been nothing but "stay the course," which isn't working.

MATALIN: No, no, no, Alan, please, get out of yesterday. The strategy in Iraq today is — and they're showing great progress there on the ground, whether or not you want to believe it or look at the evidence - - the surge is working. The politics is progressing. So you can look at the data or you can keep using old talking points. Your choice. And good luck to your marriage, Alan.

COLMES: Say hi to James. Tell him I wish he were here.

HANNITY: I will tell you what is outrageous, Mary, and that is stabbing our troops in the back, slow bleed, cutting off their equipment, and emboldening our enemies, and having a policy of retreat and defeat. That is outrageous.

Good to see you, Mary. Thank you for being with us.

Watch "Hannity& Colmes" weeknights at 9 p.m. ET!

Copy: Content and Programming Copyright 2007 Fox News Network, LLC. ALL RIGHTS RESERVED. Transcription Copyright 2007 Voxant, Inc. (www.voxant.com), which takes sole responsibility for the accuracy of the transcription. ALL RIGHTS RESERVED. No license is granted to the user of this material except for the user's personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon Fox News Network, LLC'S and Voxant, Inc.'s copyrights or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.